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8 Effective Tips for Money Management

8 Effective Tips for Money Management

Careless spending results in financial ruin in no time. In order to keep a healthy bank account, you should have a deep understanding of where your money comes and goes exactly. Money management sometimes might seem to be dry, and in difficult times it becomes even depressing, but that’s because you lack of knowledge and right strategies. Effective money management can secure your financial life and prevent you from living on the edge of financial ruin. Here are 8 effective money management tips for you.

1. Make a list of income.

Make a list of all your possible income sources, as well as the dates that they will be received. If your income fluctuates, get an estimate based on the lowest possible earnings to be safe.

2. Review the bank statements.

Review your bank statements carefully along with your previous bills since sometimes banks may commit mistakes that cost your extra money. Check your bank account at least once per week to make sure you are on track and are able to catch any incorrect charges as soon as you can.

3. Estimate weekly household expenses.

Get an estimate of your weekly household budget including groceries, toiletries and entertainment. Receipts and bank statements can help you with the accurate numbers of spending and you won’t want to do this depending on memory, since it is probably more favorable than reality.

4. Balance income with expenses.

Every week, you should develop a budget to balance your income with the expenses.  Roll the remaining bank balance over to the next week and then add income while subtract expenses every week. In this way, you will always end up with a positive balance. If you get a negative one, reevaluate for places where you can cut back.

5. Keep the receipts.

Keep all the receipts and make a note with a notebook on the purchase you pay with bank card. Each week, you will need to add up the expenses and enter the number into your budget. Compare the estimates made previously with the actual numbers, and seek for ways to trim the costs.

6. Cut the costs on unnecessary items.

Some purchases are unnecessary and can be avoided to keep your budget in the green consistently. Pay attention on your expected earnings and expenses for the near future in case you may encounter any situations that might put you in the red.

7. Save for the rainy day.

You should set aside a minimum of $1,000 saving as emergency funds. If you are in a tight budget, you may have to cut back the cost of entertainment, dining out or even cellphone and cable plans until your account go back to the green. In an ideal case, you should prepare for the rainy day with more than six months of living expenses.

8. Focus on debts and avoid using credit cards.

You should pay off your debts as soon as possible and try to avoid using credit cards. The debts and credit cards cost you more than the value of your purchases due to the high interest rates.

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